Question

For the next eight questions, use the following scenario:

Suppose there are three buyers of donuts in a market: Bob, Jane, and Rick. The market demand and individual demands of Bob Jane and Rick are shown in the table below.

Price per Donut	Bob	Jane	Rick	Total Quantity Demanded
$1.50	1	1	4	a.
$1.25	b.	3	8	13
$1.00	3	c.	12	20
$0.75	4	7	d.	25
$0.50	5	9	18	e.

1.  Fill in the missing value for a. in the table.

2.  Fill in the missing value for b. in the table.

3. Fill in the missing value for c. in the table.

4. Fill in the missing value for d. in the table.

5. Fill in the missing value for e. in the table.

6. Which buyer demands the most at a price of $1.25?  

7. If Jane left the market, which way would the demand curve shift? To the left or right?

8. Suppose that at a price of $1.00, the total quantity demanded increases from 20 to 25 units. Is this a “change in quantity demanded” or a “change in demand”?  

Answer 1

Answer 1. Since the sum of Bob's demand , Jane's demand and Rick's demand equals total quantity demanded , therefore , 1+1+4 = 6. Therefore , value of a. is 6.

Answer 2. Similarly , b.= 13-8-3 which equals 2.

Answer 3. Value of c.= 20-12-3 = 5

Answer 4. Value of d.= 25-4-7 = 14

Answer 5. Value of e.= 5+9+18 = 32

Answer 6. At the price of $1.25 , demand of Rick is the maximum. Rick demands 8 at $1.25

Answer 7. The demand curve will shift to the left , because the total demand at each price now has been reduced.

Answer 8. This is a change in demand because the change that has been occured (which caused demand to increase from 20 units to 25 units) has been due to factors other than change in price. Change in quantity demand is when demand changes due to change in price.